SolarCity Loan Guarantee Rejected by U.S. in Wake of Solyndra’s Bankruptcy

By Christopher Martin -
Sep 24, 2011

SolarCity Corp.’s loan guarantee
may have been undone by the bankruptcy of Solyndra LLC.

SolarCity, a Foster City, California-based developer of
residential rooftop solar systems, said yesterday that the U.S.
Energy Department won’t complete the $275 million conditional
guarantee that was offered a day after Solyndra sought
protection from creditors.

The Energy Department loan guarantee program has come under
political fire since Solyndra, a Fremont, California-based solar
company that received $535 million in guarantees, filed for
bankruptcy Sept. 6. SolarCity said the scrutiny prompted the
agency to request additional information.

“Because of the Solyndra bankruptcy, additional
documentation and reviews were required that we couldn’t get
done in the next five days,” SolarCity Chief Executive Officer
Lyndon Rive said in an interview yesterday. “Everyone has been
very supportive of this project and if we had a little more time
we could get it done.”

The Energy Department “will be unable to finalize their
approval” for the loan guarantee before a Sept. 30 deadline,
the company said yesterday in a letter to Representative Fred Upton, a Michigan Republican and the chairman of the House
Committee on Energy and Commerce.

Energy Department Response

The Energy Department has not changed its requirements,
Damien LaVera, a department spokesman, said in an e-mailed
response to questions.

“All of the extensive due diligence and legal
documentation simply cannot be completed by Sept. 30,” he said.
“The questions surrounding the Solyndra application had no
impact on other applications, including this one.”

Still, in a letter to Energy Secretary Steven Chu Sept. 22,
Senator Lisa Murkowski, an Alaska Republican, asked what
immediate steps the department was taking to “avoid the
mistakes that appear to have been committed with respect to
Solyndra.”

SolarCity’s conditional loan guarantee, which was offered
Sept. 7, would have supported installations on military housing
and office buildings in as many as 33 states. SolarCity was
planning a $1 billion, five-year program to install 160,000
rooftop photovoltaic systems.

The Energy Department had offered to guarantee 80 percent
of a $344 million loan to support the project. The loan was to
be provided by USRG Renewable Finance, an affiliate of US
Renewables Group LLC, in partnership with Bank of America Corp.

The loan guarantee was necessary to make the initiative
profitable, as SolarCity expands upon an initial installation at
a military base in Arizona in 2009.

Other Applications Pending

The agency still has conditional approvals valued at as
much as $6.4 billion for nine projects that it’s trying to
complete before the end of the month. It approved three of them
yesterday.

Poet LLC, the largest U.S. corn-based ethanol producer,
received final approval of a $105 million loan guarantee for its
first commercial cellulosic ethanol plant, the Sioux Falls,
South Dakota-based company said in a statement. The facility in
Emmetsburg, Iowa, will convert corncobs, leaves and husks into
25 million gallons (95 million liters) of ethanol a year.

Ormat Technologies Inc. closed $350 million in backing from
the agency to build a 113-megawatt geothermal power plant in
Nevada.

Granite Reliable Power LLC, a subsidiary of Brookfield
Asset Management Inc., received a $168.9 million loan guarantee
for a 99-megawatt wind farm in northern New Hampshire. Power
from the project will be sold to Central Vermont Public Service
and Green Mountain Power. The wind farm will use 33 Vestas Wind
Systems A/S 3-megawatt wind turbines.

First Solar Guarantees

First Solar Inc., the largest provider of thin-film solar
panels, said Sept. 22 that its 550-megawatt Topaz Solar Farm in
California won’t receive a $1.9 billion guarantee because the
Tempe, Arizona-based company can’t meet the Sept. 30 deadline.

First Solar has conditional commitments for two other solar
farms it’s developing, a $680 million guarantee for a 230-
megawatt project and a $1.8 billion guarantee for a 550-megawatt
project, according to the Energy Department’s website. The
company received a $967 million guarantee for a project in
Arizona in August.